What's Your Hourly Rate?
For any business owner looking to run a business that is more than just a job, it's important to ensure that you're working for what you're worth.
Have you thought about the time investment you are putting in to your business? Are you working for nothing?
Are you satisfied with the return on your personal time investment?
As a business coach for many years, I find that about 75% of small business owners have a disconnect here.
The issue of maximising the return on each hour you work can be a tricky one. In my experience, this is a big thing holding my clients back from achieving business growth. I call this the Hourly Rate Identity Crisis.
Find out if you're working at your real rate
To see whether you’ve hit the Hourly Rate Identity Crisis, answer the questions below:
- How much do you charge out for your time an hour?
- How many hours on average do you work a week?
- How much did you pay yourself last month?
- Is there a disconnect?
Chances are you have worked out what an hour of your time is worth, based on your skills and experience and the industry you are in.
This isn’t where the problem usually lies. The issue is, how many hours a week do you actually earn that rate?
Time is a finite resource so it’s crucial that you put it to good use. If you have an identity crisis here it can spell trouble.
What activities should you be doing to give your business the best outcomes for each hour you work? Be clear about who you are, what you do, and why. Think about your #1 Big Outcome.
The best opportunity for your business is to build one reputation for doing one thing, then add to it. Ask yourself, what’s my one thing? What am I actually worth an hour? Why? What are the activities that I do daily, weekly and monthly that help me ensure I achieve that rate?
The next question is, how many hours a week do you work on average? Most business people I know can answer this question quite easily, so now you should have two figures: an hourly rate that you believe you are worth and the average number of hours you work per week.
Now you can calculate the following equation:
What you are worth per hour ×
How many hours you work on average per week
Now, here’s the kicker: when was the last time you took home a weekly pay cheque close to that amount?
Sadly, for some business owners the answer is never, which may indicate you have an employee or self employed mindset versus a business owner who is in growth mode mindset.
If this is you, this is a huge wasted opportunity for your business.
So if you’re not taking home close to that amount each week, or even some weeks, or even occasionally, what’s the problem? If you’re not skiving off and going to the beach then clearly you’re spending time at the office doing tasks you shouldn’t be doing. Yes that’s right, you shouldn’t be doing!
I’m not saying those tasks don’t need to be done, just that they don’t need to be done by you.
What about if you are achieving this every week? Does that mean everything is peachy? Not at all.
If you are reaching this target every week your hourly rate is too low! Nobody can work at their maximum achievable hourly rate every single hour for a whole week, let alone week after week, so if you think you are doing this you need to increase your hourly rate.
There is clearly room for you to do so and you are currently missing out on this opportunity.
For more on this topic, listen to our podcast episode "Your Hourly Rate Identity".
Power to you!
CEO, Business Benchmark Group
Stefan Kazakis on 5 May 2018
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